7/7/15

Your humble scribe will pretend to be out of the office, pretend to visit people and pretend to work on deep due diligence in the mining sector for the next three days, in which time posting will be light. So considering the metals market action so far this week we leave you in the capable hands of Jack...

There was an old rusty freighter out in the bay that was used as a buoy. Remi was all for rowing out to it, so one afternoon Lee Ann packed a lunch and we hired a boat and went out there. Remi brought some tools. Lee Ann took all her clothes off and lay down to sun herself on the flying bridge. I watched her from the poop. Remi went clear down to the boiler rooms below, where rats scurried around, and began hammering and banging away for copper lining that wasn't there. I sat in the dilapidated officer's mess. It was an old, old ship and had been beautifully appointed, with scrollwork in the wood, and built-in seachests. This was the ghost of the San Francisco of Jack London. I dreamed at the sunny messboard. Rats ran in the pantry. Once upon a time there'd been a blue-eyed sea captain dining in here.I joined Remi in the bowels below. He yanked at everything loose. "Not a thing. I thought there'd be copper, I thought there'd be at least an old wrench or two. This ship's been stripped by a bunch of thieves." It had been standing in the bay for years. The copper had been stolen by a hand that was a hand no more.I said to Remi, "I'd love to sleep in this old ship some night when the fog comes in and the thing creaks and you hear the big B-O of the buoys."Remi was astounded; his admiration for me doubled. "Sal, I'll pay you five dollars if you have the nerve to do that. Don't you realize this thing may be haunted by the ghosts of old sea captains? I'll not only pay you five, I'll row you out and pack you a lunch and lend you blankets and candle.""Agreed!" I said.

...and by way of bonus, Paco de Lucia and his Sevillana "Cobre". Spanish for 'copper', of course.

A pretty good report on Focus Ventures (FCV.v) and its Bayovar 12 phosphate project from something called "The Ag Letter" (new to me). It goes over all the main points and does a little work on the project economics, too. Well worth a view.

Back in late June, your humble scribe got off the fence, stopped being kinda-leery-but-maybe-there's-hope-ish about copper and laid out the full bear scenario for all to see in IKN319. Here's an extract from that edition of the Weekly, dated June 21st:

"I believe the copper market's going
the way of iron ore and there's no reason to hold even the minimal exposure
that I have in the metal at the moment.What we've seen in the iron ore
space is the small players squeezed out by the big. Rio
Tinto, BHP and Vale have been happy to oversupply the market and dump the price
down, which has been the death (quite literally) of many of the smaller and
medium-sized players in the iron ore space, not to mention the crushing of any
company looking to develop an iron ore project as a junior explorer. We're now
seeing the same type of market conditions begin to appear in the copper space,
with the big players happy to run their big mines at full speed because they're
still highly profitable at the current copper prices, but the small players,
the medium-sized and those left holding exploration projects are now being
priced out.

A couple of days later, as if by sheer coincidence and all that, several subscribers sent over the link to this Infographic (I think that's what the cool kids call 'em) entitled "The Looming Copper Supply Crunch", published by Visual Capitalist, because its bullish view of the metal's fundies was the exact opposite of your author's bearish "get out of copper" attitude.

That Visual Capitalist piece was interesting for two reasons. Firstly because (and here's a screenshot from it)...

...it was sponsored by a junior mining company with a big copper project. My what a coincidence. Secondly because after a couple of seconds I realized what was wrong with the title. Everything was spelled right, but they'd got their punctuation wrong. It should have been:

"The looming copper supply. Crunch."

Here we are in early July and the IKN corrected version is making a lot more sense.

Oh, the wailing and gnashing of goldbug teeth over the last couple of weeks as Greece has imploded but their preciousssssssssss metal hasn't made them any money. Just not jolly well fair is it chaps?

Anyway, good news for you. As of this week gold should start moving up and bring you all some hoorah. The reason? The real safe haven, the US dollar, can't move up muchy further and those wishing to stash cash away from Euro exposure will need to find somewhere else. So, expect the dollar to roughly flatline and due to that, gold should start catching a modest bid or two, perhaps up to U$1,185/oz.

UPDATE: Yes you're right, this was posted at 10:47am local time when gold was trading at U$1,165/oz. Why do you ask?

7/5/15

An example of the complete crap they're still serving up for the benefit of the lumpen. Firstly, if you didn't get that Greece was going to vote No this weekend you deserve to lose any money you risked on the counter, it was that freakin obvious. Second, there isn't going to be any "crisis" when the markets open tomorrow morning, just the same as there wasn't one last Monday despite the best efforts of the dumbass brigade of wailers. There will be a market adjustment, then life will go on unruffled. The rest is noise.

Want it simple?

1) Markets don't like surprises.

2) Greece voting No today is not a surprise.

3) Markets won't care.

What the market will care about is if Merkel and her friends decide to throw Greece out the Eurozone, but that's already been decided; they won't. Syriza had already won the game of chicken before the polls even opened this morning.

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